Hong Kong SFC mulls allowing staking for Ethereum ETFs

Hong
Kong’s
Securities
and
Futures
Commission
(SFC)
is
reportedly
exploring
the
possibility
of
allowing
Ethereum
ETFs
under
its
jurisdiction
to
stake
their
tokens,
a
move
that
sets
it
apart
from
the
stance
taken
by
US
regulators.

This
initiative
aligns
with
the
SFC’s
progressive
approach,
following
its
recent
approval
of
spot
Ethereum
ETFs
alongside
Bitcoin
products.
According
to
the
report,
the
talks
are
still
ongoing
and
no
clear
timeline
for
a
decision
has
been
provided.

Staking
on
Ethereum
enables
participants
to
lock
up
their
Ether
(ETH)
hold
to
support
network
security
and
operations
in
exchange
for
rewards.
The
process
involves
depositing
a
minimum
of
32
ETH
to
activate
validator
software,
which
allows
users
to
participate
directly
in
Ethereum’s
consensus
by
validating
transactions,
creating
new
blocks,
and
monitoring
for
malicious
activity.
Other
types
of
staking
allow
participants
with
less
than
32
ETH
to
pool
funds
(staking
pools),
while
some
platforms
also
provide
staking
as
a
service.

The
introduction
of
staking
could
potentially
attract
more
investors
to
Hong
Kong’s
Ethereum
ETFs,
which
have

struggled
with
low
trading
volumes
since
their
launch.
Aggregated
data
indicates
that
the
total
ETH
in
these
funds
was
13,380,
while
the
total
BTC
was
3,690.

In
contrast,
the
US
Securities
and
Exchange
Commission
(SEC)
has
argued
that
staking
could
fall
under
federal
securities
law,
taking
legal
action
against
major
crypto
firms
like
Kraken
and
Coinbase
over
their
staking
products.
This
stance
has
been
met
with
strong
opposition
from
crypto
stakeholders.

Given
the
regulatory
uncertainty
in
the
US,
several
Ethereum
ETF
applicants,
including
Fidelity,
BlackRock,
Grayscale,
Bitwise,
VanEck,
Franklin
Templeton,
Invesco
Galaxy,
and
ARK
21Shares,
have

excluded
staking
from
their
fund
plans.
Some
market
participants
argue
that
this
decision
might
make
these
funds
less
attractive
to
investors.

The
SEC
is
expected
to
announce
its
decision
on
the
pending
Ethereum
ETF
applications
Thursday,
May
23.
Market
sentiment
has
turned
positive
this
week,
with
Bloomberg
analyst
Eric
Balchunas

raising
the
odds
of
approval
to
75%,
citing
increasing
political
pressure
on
the
financial
regulator.
Similarly,
the
chances
of
approval
have
spiked
to
65%
from
a
low
of
10%
on
Polymarket.